12 June 2013 03:54 [Source: ICIS news]
By Veena Pathare
SINGAPORE (ICIS)--Spot acetone prices in India are likely to rise in June on the back of limited availability of July-shipping cargoes, market sources said late on Tuesday.
Discussions for July-loading lots were initiated during the present week, and producers were heard to be targeting an increase of $10.00-20.00/tonne (€7.50-15.00/tonne) for July parcels, compared with June-loading cargoes.
“We are looking for a higher price for July lots, since our availability for July is very limited,” a chief Asian producer supplying regularly to the Indian market said.
While one Taiwanese producer said it had only half its usual volumes available to offer to the Indian market, a separate Taiwanese producer said it was not in a position to offer any spot volumes to India for shipment in July.
Consequently, selling ideas for Taiwanese cargoes for loading in July were heard higher at $1,100/tonne FOB (free on board) Taiwan, equivalent to $1,160-1,170/tonne CFR (cost & freight) India, compared with $1,060-1,080/tonne FOB Taiwan for June lots.
Cargoes of Middle Eastern origin were also heard offered to the Indian market at $1,160-1,170/tonne CFR India this week, higher by $10-20/tonne from the prices for June cargoes.
Spot acetone prices have been on an uptrend since early May, rising by $30-50/tonne since end-April, following the increase in offer prices for end-May and June-shipping cargoes.
On 5 June, acetone prices were assessed at $1,120-1,150/tonne CFR India, up by $5/tonne at the high end from the week ended 29 May based on deals and discussions heard for June-shipping lots, according to ICIS data.
Most acetone/phenol facilities in Asia have continued to be operated at reduced capacities since November last year, owing to unfavourable margins on phenol.
With acetone being produced as a by-product in the manufacture of phenol from feedstock benzene, availability of acetone continues to be limited.
A fresh round of operation rate cuts in April and May has additionally curtailed export volumes of northeast Asian July-shipping cargoes.
Taiwanese cargoes sold to the Indian market are exempt from payments of antidumping duties (ADDs), while South Korea and Singapore-origin cargoes sold to the south Asian country are subject to ADDs of $67/tonne and $147/tonne respectively.
While dutiable cargoes are usually offered to the advance licence market, no Singapore-origin cargoes have been offered to the Indian market since late February this year, owing to a lack of spot availability following lower operating rates at the producer’s facility.
Although South Korean cargoes have been offered to the Indian market since March this year, they have drawn limited response from regional importers owing to a gap in buy-sell ideas.
However, despite the tightness in supply, demand in the domestic markets has remained largely unchanged leading to buyers resisting the higher offers.
The significant depreciation in the Indian rupee against the US dollar importers has also led to importers’ unwillingness to accept the offered prices for July cargoes.
“With the rupee depreciating by 2% everyday, imports have become very expensive,” a regional acetone importer said.
“Although the rupee has fallen significantly in the last two to three weeks, the domestic ex-tank price has only marginally moved up, which shows a largely slow offtake from downstream markets,” a separate local trader said.
The ex-tank prices have risen from Indian rupees (Rs) 71-72/kg ($1,217-1,234/tonne) ex-Kandla, to Rs72-73/kg ex-Kandla during the week.
This increase is minor, given that the rupee has fallen to Rs58.34 to a US dollar, from less than Rs55 in mid-May, market sources said.
While Asian producers deem it difficult to consider lower acetone offers, they were heard to offer lower prices for acetone purchases made along with phenol.
However, few Indian importers were willing to commit to purchasing phenol, amid lacklustre demand.
India consumes about 120,000 tonnes of acetone each year, more than half of which is primarily imported from northeast Asia, while the rest is covered by domestic production.
Acetone is used as a solvent in the manufacture of pharmaceuticals and industrial coatings.($1 = €0.75, $1 = Rs58.34)
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